News / Economy

US Anti-Corruption Law Snags Major Tech Company

FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
Earlier this month, the U.S. technology company Hewlett Packard agreed to plead guilty to bribery charges involving its Russian, Polish, and Mexican subsidiaries. 
 
Hewlett Packard admitted to the U.S. Department of Justice that it bribed Russian officials in hopes of landing a lucrative contract with Moscow’s Office of the Prosecutor General.  In Poland, HP admitted to bribery connected to contracts with the national police agency, while in Mexico, the illicit cash was tied to deals with Pemex, the state oil company.
 
What snared Palo Alto, California-based “HP” is the Foreign Corrupt Practices Act (FCPA), a groundbreaking law enacted nearly four decades ago.
 
HP’s agreement to pay US$108 million in both criminal and civil penalties is the tenth largest settlement ever under the FCPA. Other corporations that have been caught in FCPA’s net include Walmart, Halliburton, KBR, Siemens, BAE Systems, and Daimler AG.
 
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught.  “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”
 
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977. It was enacted in the wake of a U.S Securities and Exchange investigation that found more than 400 U.S. corporations had collectively paid more than $300 million in bribes to foreign officials and political parties. 
 
“The passage of the FCPA itself was revolutionary,” says Sarah Pray at the good governance and accountability organization Open Society Foundations. “In an era when you could still deduct bribes from your taxes in some countries, the United States took a stand.”
 
The FCPA casts a broad shadow covering both corporations and individuals. Under the law’s provisions, anyone – regardless of nationality - is in violation of the law if they engage in bribery while in the United States.  That denies legal haven to foreigners engaging in corrupt activities offshore while in the U.S. The FCPA also applies to U.S. citizens’ financial actions overseas.  And, since 1997, it covers foreign corporations that are traded on U.S. stock exchanges and securities markets.
 
The FCPA also blocks the use of proxies to engage in illegalities.

“The FCPA’s third party liability provisions,” says Washington attorney and FCPA expert Lucinda Low, “makes it a crime to make a payment to any person, knowing that the payment or other value will be passed through in whole or in part of a foreign government official or other covered [by the FCPA] recipient.”
 
Interestingly, though, so-called facilitation or “grease” payments to foreign officials may be legal under FCPA, if done to expedite that official’s performance of duties.  And, payments to foreign officials may also be legal if the host country permits such activity.
 
Enacting the FCPA promoted a number of other nations to follow suit.   Britain passed the Bribery Act, while Canada enacted a similar law. Anti-corruption laws have been enacted in China, Thailand, Malaysia, Brazil, and many other countries. The United Nations has responded by enacting the U.N. Convention on Corruption, while the 40 state Organization for Economic Cooperation and Development (OECD) enacted, in 1997, an Anti-Bribery Convention, though the anti-corruption group Transparency International chides the OECD for not insisting its member states more aggressively enforce the provisions of that agreement.
 
While the FCPA has a broad reach, a former Justice Department FCPA prosecutor says it has a limitation – time – that needs to be changed. 

“I think there are statute of limitations issues [within the FCPA],” says Kathleen Hamann. ”A lot of complex economic crimes in the U.S. have a 10 year statute of limitations. But, the FCPA has a five year statute of limitations.” Hamann, now in private practice, adds”I think there are a lot of individuals who end up not being prosecuted because the statute of limitations has run out.” She says “I think we need to treat it [bribery and other crimes covered by FCPA] as what it is, a complex financial crime.”
 
Sarah Pray calls for the FCPA’s expansion in another direction.

“The United States should outlaw all commercial bribery, not just bribery of foreign officials. Secondly,” Pray adds, “the United States should outlaw ‘facilitation payments. The line between a bribe and a facilitation payment is a blurred one, and this distinction should be eliminated.”
 
Along with penalties for misbehavior, Lucinda Low says the FCPA has compelled the business world to become proactive. “FCPA”, she says, “created expectations that companies will institute internal programs and controls to prevent, detect, and remediate bribery and corruption throughout their organizations. “

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

You May Like

FIFA Indictments Put Gold Cup Tournament Under Cloud

Experts say US indictments could lead to charges of other world soccer officials, and lead to major shakeup in sport's governance More

Video Seoul Sponsors Korean Unification Fair

At a recent even in Seoul, border communities promoted benefits of increased cooperation and North Korean defectors shared stories of life since the war More

Video VOA EXCLUSIVE: Iraq President Vows to Fight IS 'Until They Are Killed or We Die'

In wide-ranging interview with VOA Persian service reporter, Fuad Masum describes conflict as new type of fight that will take time to win More

This forum has been closed.
Comment Sorting
Comments
     
by: ed
April 24, 2014 10:52 PM
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught. “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”

Thanks Julie. Actually, the true deterrent here doesn't exist, which is likely by design if those evil companies bribed local officials too in order to have the law written in a way that wouldn't present a real threat. Until the public forces government to treat the Directors of Global Money Grab Inc like it does poor people and slams their crooked butts into a cage, it will continue to be business as usual for the Government Industrial Complex. Here no evil, see no evil, speak no evil.

by: Gervazio Degan from: Joao Pessoa, Brazil
April 21, 2014 10:22 AM
I don't understand because Brazil is not cited among the countries bribed.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Expelled from Pakistan, Afghan Refugees Return to Increased Hardshipi
X
Ayesha Tanzeem
May 28, 2015 6:48 PM
Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Expelled from Pakistan, Afghan Refugees Return to Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video Floodwaters Recede in Houston, but Rain Continues

Many parts of Texas are recovering from one of the worst natural disasters to hit the southwestern state. Heavy rains on Monday and early Tuesday caused rivers to swell in eastern and central Texas, washing away homes and killing at least 13 people. As VOA’s Greg Flakus reports from Houston, floodwaters are receding slowly in the country's fourth-largest city, and there likely is to be more rain in the coming days.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.

VOA Blogs

World Currencies

EUR
USD
0.9205
JPY
USD
123.69
GBP
USD
0.6508
CAD
USD
1.2456
INR
USD
64.051

Rates may not be current.